Loihde - Favourable profitability development
Loihde’s Q2 was better than estimated, profitability in particular, with adj. EBITDA up EUR 1.6m y/y to EUR 2.6m (Evli EUR 1.9m). We continue to expect favourable growth and profitability development going forward.
Growth and profitability better than expected
Loihde reported Q2 results that were better than we had estimated. Net sales in Q2 grew by 3% y/y to EUR 35.4m (Evli: EUR 34.9m) while the adj. EBITDA beat our estimates driven by the higher sales growth and amounted to EUR 2.6m (Evli: 1.9m), improving by EUR 1.6m y/y. Q2 saw a similar trend as in Q1, with Security Solutions and Cyber, Cloud & Connect growing rapidly, while Data & AI and Digital Services saw sales declining.
Anticipating slower growth but good margins in H2
We have made only small revisions to our estimates. We have slightly lowered our H2 sales growth expectations based on management comments regarding Security Solutions and the rapid H1 growth of the business area, with our 2024e sales growth now at 3.5%. Our 2024 adj. EBITDA estimate is up a notch to EUR 10.7m (prev. 10.5m) based on the better than anticipated Q2 and H2 adjustments. The cost base decreased slightly y/y in Q2, but with comparison period figures affected by costs related to ERP implementation, we anticipate slight cost pressure on H2. Comments on the market situation overall did not suggest any notable swings in either direction. We currently anticipate slightly accelerated growth in 2025e driven by recovery in the currently weaker performing business areas amid slightly slower growth in Security Solutions on the good comparison figures. The growth should in turn translate to higher margins through improved billing rates.
HOLD with a target price of EUR 12.2 (11.8)
With the upbeat Q2 and slight positive estimates revision we adjust our target price to EUR 12.2 (11.8). Valution upside remains dependent on pick-up in demand, with current near-term multiples remaining on the more challenging side.